The process and outcomes of divorce are always multifaceted and difficult, even in the best of economic times. When a couple divorces, they are divorcing emotionally, socially, legally and of course, financially. Depending on the timing of one’s divorce, these areas of divorce can produce problems that are particularly challenging relative to other times one might divorce.
When a couple chooses to collaborate in the context of a Collaborative Divorce, they are choosing a process that is designed to provide opportunities, including the opportunity to design a financial outcome based on their collective goals and interests. Whether verbalized or not, collaborating couples almost always want an efficient process where the financial outcome is reasonable and acceptable for both. In other words, how can we produce a financial outcome that best meets our collective goals and interests and do so as efficiently as possible? Even in the best of economic times, we know this is not an easy task.
A key driver in addressing the financial options of a divorce are the current options that are actually available to discuss, review and ponder as potential solutions to settlement. Unfortunately, difficult economic times can significantly narrow the choices available. There are many moving parts in our financial lives that ebb and flow with the economic tide, including:
- Income – Job stability and availability can vary widely depending on both the economic environment and one’s chosen line of work. One scenario may indicate promotions, raises and bonuses, whereas another may foretell long-term stress, stagnation or termination. Re-training and re-education for couples playing “human capital catch-up” may be a particularly challenging endeavor during uncertain economic times.
- Expenses – It is a well-known fact that spending tends to be more robust during stronger economic periods. Larger homes, more expensive cars, and general spending tends to inflate during the good times. This tends to produce increased obligations, including debt, that can be difficult to address in a divorce, regardless of the economic environment. Children and their expenses also play a key role.
- Assets and Liabilities – During difficult economic times, the values of real estate, stocks, bonds, and other assets can move unevenly and securing debt post-divorce can be a problem for one or both spouses. The number of options available for settlement are usually more expansive and attractive during good economic times, when asset values are supportive and debt availability typically easier.
When a divorce occurs during difficult economic times, the choice of process is even more critical. The pandemic and resulting economic upsets have reminded us, once again, that when times get tough, we need people and processes that are focused on problem solving, not problem creating.
The process of Collaborative Divorce is designed as a problem-solving process, giving clients the opportunity to learn, assess and review options to optimize outcomes. In the financial arena, this means working to maximize future financial outcomes for both spouses rather than just attempting to claim value for oneself, a common approach in the litigation process. The Collaborative Divorce process is the obvious choice when couples are attempting to maximize economic outcomes during their divorce, especially during difficult economic times.